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The TL;DR:

• Let’s Chat D2C: The LTV to CAC Golden Ratio of 3 to 1!

• What I’m Thinking about this Week: The Ultimate Pre and Post-Purchase Customer Journey with New Inclusions.

• The D2Z Podcast: In this week’s episode, I sat down with Jessica Kogan, Former CMO of Vintage Wine Estates and current Partner at Connect the Dots Collective.

• App Updates & Highlights: Klaviyo Portfolio and Klaviyo SMS Smart Opt-in.

• Upcoming Events: SubSummit in Dallas June 17-19.

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Let’s Chat D2C - The LTV:CAC Golden Ratio of 3:1

The LTV:CAC ratio (lifetime value to customer acquisiton cost) is one of my favorite metrics to evaluate the financial health of a business. This ratio measures the relationship between the lifetime value of a customer and the cost to acquire that customer, serving as a barometer for evaluating the efficiency of a company's marketing efforts and its overall financial health.

Ideal Range

A high LTV:CAC Ratio (e.g., > 3:1) indicates strong profitability and efficient marketing whereas a low LTV:CAC Ratio (e.g., < 3:1) indicates that the cost to acquire new customers is not sufficiently covered by the revenue they generate.

How to Act on Your Range

If you’re above a 3:1, you should consider expanding marketing efforts, doubling down on paid efforts, and potentially exploring new markets for expansion.

If you’re below a 3:1, this could suggest you’re facing high customer acquisition costs, low customer retention, or low sales per customer.

Leveraging Cohort Analysis

Your brand’s overall LTV:CAC ratio is just the tip of the iceberg; you should drill down into different customer segments to see if your LTV:CAC ratio is significantly different across different acquisition channels, demographics, regions, etc.

For example, your customers coming from Google Ads could have a lower CAC than customers from Facebook Ads, but if the Google Ads cohort has a lower LTV than customers from Facebook Ads it could still make more sense to spend more on Facebook rather than Google. Even within a channel you can analyze your acquisition efforts.

One of my favorite tests to run is to see how the type or amount of intro offer plays out in impacting the LTV:CAC ratio.

Tracking Over Time

The LTV:CAC ratio is a great metric to track over time, as its changes can provide insights into your business strategy, marketing conditions, and competitive dynamics. If your LTV:CAC ratio is declining, some of your strategies and initiatives might need a rethink.

Tools to Help

There are plenty of reporting tools in the Shopify Ecosystem, but my favorite to monitor LTV:CAC ratio and conduct cohort analysis is Lifetimely by AMP. They just released an Amazon integration as well so you can monitor LTV:CAC ratio across multiple channels.

What I’m Thinking About This Week - The Ultimate Pre and Post-Purchase Customer Journey with New Inclusions

I’ve written and presented on the ideal pre and post-purchase customer journey quite a bit over the past few years, but I just spoke at Gorgias’ DTCx Talks San Diego this past Thursday and it was due for a refresh.

Gorgias Convert - Live Chat

One of my new inclusions in the guide is Gorgias Convert, which I like to use throughout the entire pre-purchase website journey, but especially on the product page, to:

• Act as a shopper’s assistant

• Provide product recommendations

• Incentivize specific products

• Cross-sell items

You can make sure it’s personalized to the individual visitor by creating segments based on Shopify browsing data and tags.

Direct Mail

Direct mail has been picking up a lot of steam over the past year, and it can help in two main areas across the pre and post-purchase journey: retargeting prospects and retargeting customers.

Direct Mail - Retargeting Prospects

MailMatch: Only have an email address? PostPilot’s MailMatch software matches email addresses to physical addresses so you can target these prospects with direct mail.

SiteMatch: Convert anonymous website visitors into customers with direct mail.

CartMatch: Target cart abandoners with direct mail.

Direct Mail - Retargeting Customers

Reactivation: Connect with customers who canceled subscriptions or disengaged from your brand. The best part? You can even target past customers no longer subscribed to email or SMS marketing.

Replenishment: automatic reminders for customers to re-up on their favorite products.

Second Purchase: Tackle the “one-time buyer” problem head-on and target your first-time customers with specific messaging to incentivize a repeat purchase.

Returns

With Loop, you can provide a seamless returns experience that incentivizes store credits and exchanges over returns while providing a better customer experience.

This Week’s The D2Z Podcast

#104 – The Future of Commerce: Bridging the Gap Between Digital & Physical

🎧 Listen Now 🎧

In this week’s episode, I sat down with Jessica Kogan, Former CMO of Vintage Wine Estates and current Partner at Connect the Dots Collective. Specifically, we explored the following:

💰 The relationship between online and offline commerce

📲 Leveraging digital tools for offline engagement

😎 What leading companies like Target and Walmart are doing to enhance customer experiences and drive growth

🚀 How much (or little) AR and VR are going to play in the retail experience

App Updates & Highlights - Klaviyo Portfolio and Klaviyo SMS Smart Opt-in

Klaviyo Portfolio

Multi-account management just got a lot easier with Klaviyo Portfolio.

With new capabilities like Account performance reports, you can unlock valuable insights across all of your brands, filtering reports by brand or region, mapping conversion metrics together, and creating custom reports with one-click export. You can also view account usage, billing details, user activity and permissions, and more for each account in a centralized dashboard.

Beyond reporting, you can streamline all of your marketing communications, localize your campaigns with the flow and campaign cloning, and easily share templates, forms, and segments across accounts.

Klaviyo SMS Smart Opt-in

Klaviyo SMS Smart Opt-in is here to make subscribing to your SMS program easier. Here’s how it works:

1. A site visitor inputs their phone number in a form with Smart Opt-in configured.

2. Site visitors receive a 6-digit code sent to that phone number (this code is sent from a short code managed by Klaviyo - NOT your brand’s regular number).

3. Site visitor sees an additional form step asking for the code.

4. Based on device type, the visitor enters the code and submits the form to confirm the opt-in status (On mobile devices, they can click to autofill the code, and if they’re on desktop, they have to manually copy the code from their SMS messages into the form).

Upcoming Events

I’m headed to SubSummit in Dallas June 17-19!

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